INDUSTRY TRAINING BOARD – FILM SECTOR

QUESTIONS AND ANSWERS

1.What is an IndustryTraining Board (ITB)?

Where there are skills problems in a sector and both sides of industry agree that a statutory framework for training is the best way forward then this requires the establishment of an Industry Training Board (ITB). The Industrial Training Act 1982 as amended sets out the functions and powers of an ITB.

The main purposes of ITBs are to:

  • initiate, improve and facilitate training to meet the needs of employers, employees and those wishing to enter the industry; and
  • develop and promote training standards.

It is for the Board to determine its priorities and the activities it will pursue within the provisions of the Industrial Training Act.

ITBs have powers to levy employers within the industry they cover and to pursue companies in the scope of the levy with legal action if they fail to make the payments required through the levy.

ITBs are non departmental public bodies,managed and operated by representatives of employers and employees from the industry and aretherefore accountable to the industry as well as to Parliament. There are currently two ITBs, the Construction ITB and the Engineering Construction ITB.

2.What is the difference between Skillset Sector Skills Counciland Skillset Film ITB?

Skillset is the Sector Skills Council for the Audio Visual Industries (broadcast, film, video, interactive media and photo imaging). It is an independent UK-wide organisation that is owned and managed by the audio visual industries and works with both the industry and government to identify and tackle the skills and productivity needs of the audio visual industries throughout the UK. It is jointly funded by the industry and government and has five key business objectives. These are:

  • producing informed research and gathering intelligence to underpin planning;
  • developing effective partnerships and communications with all stakeholders to stimulate innovation, champion diversity and promote advocacy for skills;
  • building strategies with the industry and public agencies which provide action plans to support productivity gain;
  • developingand implementing innovative and effective models of good practice in the delivery of skills solutions and careers information adviceand guidance to improve the competitiveness of the sector and increase diversity; and
  • informing,developing and promoting quality education, training and qualification frameworks.

The ITB’s scope would be narrowerthan the Sector Skills Council (focusing solely on the film industry within Great Britain) and its remit concentrated on securing and directing investment in skills. It would be essential for the Sector Skills Council and the ITB to work closely together delivering an agreed strategy, complementing and not duplicating each other’s roles.

3.How are skills needs met now in the film industry?

In September, 2003, following over a year of research, consultation and deliberation, Skillset and the UK Film Council published ‘A Bigger Future: the UK film skills strategy’. This set out a range of actions needed to meet future skills needs in four key areas:

  • careers information, advice and guidance;
  • further, higher and postgraduate education;
  • new entrants, professional and company development; and
  • collecting and analysing information.

You can access the strategy from Skillset’s website ( or order a copy from Skillset, Prospect House, 80-110 New Oxford Street, LondonWC1A 1HB, tel 020 7520 5757.

A key element in implementing the strategy is the establishment of a Film Skills Fund to finance the implementation of the strategy. This comprises

  • contributions from film productions through the Skills Investment Fund in recognition of the freelance workforce;
  • contributions from film companies for specific projects;
  • DCMS Lottery funding from the UK Film Council;
  • Partnership investment from training providers; and
  • EU public funding for film.

It is anticipated that this combined investment totals around £10m per annum. The Skills Investment Fund (SIF) which currently operates on a voluntary basis from all productions based in the UKis an important contributor to investment in skills. But the industry is concerned that it is not sustainable in its current voluntary form.

4.How does the Skills Investment Fund (SIF) operate now?

As noted above SIF currently operates on a voluntary basis. The contribution requested is 0.5% of the total production budget up to a maximum capped contribution of £39,500. The current budget threshold for contributions is £5,000.

To date the SIF has collected £3m from over 250 productions with a broad range of budgets and achieved an average support rate of 65% from the industry.

It has been managed by Skillset and the social partners and monitored by the Department for Culture, Media and Sport (DCMS). The fund is invested in the four priority areas identified by industry in the “A Bigger Future: The UK Film Skills Strategy”.

5.Why might the industry want to make this change and establish an ITB?

Given the progress made by the industry in identifying skills needs and priorities, the main reasons relate to putting the current voluntary funding of the SIF on a statutory basis:

  • a mandatory model would collect increased and more regular funds for the benefit of skills, talent and company development in the GB film industry. Skillset estimates that on average an additional £0.5m per annum would be raised from the industry for investment in skills;
  • putting the SIF on a statutory basis would ensure its stability and continuity. There are concerns that support for a voluntary approach would wane as the two thirds of companies which contribute see the one third which don’t continue to benefit from the enhanced skills base. All contributors to a mandatory SIF would know that they were not subsidising industry training initiatives and trainees for the benefit of those who chose not to contribute; and
  • the management of the mandatory levy by the Industry Training Board (ITB) would mean that the ITB would be able to set levy rates that are right forand reflect the training needs of the film industry.

6.Why might the industry not want to establish an ITB?

There wouldinevitably be a small increase in the central bureaucracy as the ITB complies with statutory requirements for strategic, planning and financial information which it would have to provide to its sponsor Department (DfES). Another organisation as well as Skillset in this sphere may cause confusion and blur roles and responsibilities.

Some in the industry might not support the introduction of compulsion in payment of the levy and the risks associated with pursuing those who do not comply with the requirement to pay the training levy.

7.Who decides who is in scope to pay the levy and how much they must pay?

The definition of the industry for which the Board would exercise its functions would be set out in a statutory instrument agreed by parliament. This would be drawn up based on advice and discussions with the industry.

It is for the ITB to propose the levy rate for its sector. If the Board didnot wish to issue exemption certificates and proposes to raise a levy above 0.2% of an employers payroll then the Secretary of State must be satisfied that the levy proposals were necessary and that one of three conditions specified in the Industrial Training Act was satisfied. Levy orders are also subject to approval by parliament.

8.What are the tax implications of a training levy?

The Inland Revenue Business Income Manual at BIM 47,605 confirms that training levies to Industry Training Boards are fully deductible as business expenses for tax purposes by companies.

9.What could a levy model for the film industrylook like?

As a guide to the sort of levy model that might be appropriate for the film industry, Skillset and its partners had suggested the following model in the consultations they undertook in late 2003/ early 2004.

Outline of contributors:

Any feature film production based in GB or employing British crew, studios and facilities or in receipt of government funding would be required to pay the levy which would be channelled into the Film Skills Fund.

Potential collection mechanism:

  • 0.25% of total production budget for films under £5m
  • 0.5% of total production budget for films budgeted over £5m

A threshold and cap to the amount of individual contributions would be proposed by the Board of Skillset Film ITB reflecting and representing the requirements of the industry.

  • Each production would have to supply a copy of the budget and name one producer (or equivalent) to take responsibility for payment of the levy and provide full contact details including contact names for financiers. The budget might exclude (as in the current voluntary scheme) the completion fee; the levycontribution; financing costs – any budgeted insurance costs in respect of raising and servicing the finance of the film; and business overheads not specifically incurred in the production of the film.

The mandatory model might also:

  • Cease collecting contributions from short films unless in receipt of public funds.
  • Continue to be payable on or prior to the first date of principal photography and a stamped invoice would be issued on receipt of payment.
  • Collect contributions from productions shot outside GB in recognition of the GB spend which includes any payment to British cast and crew, use of British locations, equipment hire, GB based studio and post-production facilities.
  • Continue to collect contributions from the whole production budget of productions that were shot abroad but in receipt of publicfunds.

10.Would the ITB be a UK wide organisation?

No, theIndustrial Training Act 1982 only permits the Secretary of State to establish ITBs for Great Britain, subject to the agreement of the Privy Council. The current voluntary arrangements are expected to continue in Northern Ireland. The ITB would need to agree with the industry in Northern Ireland and Skillset the relationship and complementary arrangements between the ITB and the industry in NI.

11.If it is decided to establish an ITB what would happen next?

If these consultations show wide spread support within the film industry for an ITB, then the Secretary of State for Education and Skills would seek the agreement of the Privy Council to establish an ITB with powers to operate in Scotland as well as England and Wales. If that is forthcoming, the Secretary of State would then lay an order in parliament establishing the ITB. This order would define the activities of the film industry with which the Board would be concerned and it would be the employers wholly or mainly engaged in the specified activities who were subject to any levy which the Board initiates. The Board would then consult with the industry on its levy proposals and those supported would be submitted to the Secretary of State for her consideration. Once agreed the Secretary of State would present these to parliament for discussion and approval.

We estimate that it would take around 12 months to complete all the necessary consultations and parliamentary procedures to have the Skillset Film ITB in place with agreed levy arrangements.

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